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Terminate the IT Infrastructure Outsourcing
Relationship
There must be 50 ways to leave your vendor.
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Our Understanding of the Problem
This Research is
Is Designed For:
This Research Will Help You:
 Infrastructure Managers/VPs of organizations
 Diagnose the root cause behind your
that have outsourced IT infrastructure and are
considering terminating their current
agreement.
outsourcing problems.
 Decide whether to terminate the agreement
and switch service providers.
 Plan to rehabilitate and stay with the provider,
re-negotiate, or switch providers.
 Move your data center to a new service
provider.
This Research Will Also
Assist:
Assist:
This Research Will Help You:
Them:
 IT Directors and CIOs of organizations that
 Understand the risks and cost implications of
have outsourced IT infrastructure
 CFOs of organizations that have outsourced IT
infrastructure
terminating outsourcing agreements and
switching vendors.
 Understand the different cost models for each
outsourcing deployment method and how the
current IT operating expenses may change
after the switch.
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Executive Summary
Situation
!
• Many events can trigger an organization to leave its IT infrastructure
1. Don’t switch providers unless there
is no way to rehabilitate the current
agreement and relationship.
Switching is expensive, and the vendor
is often not the problem.
outsourcing (co-location, managed services, IaaS) service provider,
including dissatisfaction with the current agreement and changes in
organizational or vendor circumstances that make it impossible or no
longer desirable to stay.
Complication
?
• Moving your IT infrastructure can be a tricky process, especially for
•
•
Info-Tech Insight
critical infrastructure with stringent availability requirements.
The high switching costs in most contracts make it not only more
expensive to switch, but also more difficult to find a new vendor.
Many organizations continue to experience the same pains even after
they’ve switched vendors because the vendor isn’t always the cause of
the problem.
2. The only thing that’s certain in IT is
failure. Embrace this and focus on
helping your provider continuously
improve its mean time to respond and
mean time to repair.
3. Moving your data center is a large
project that involves two steps. You
must move infrastructure into the new
vendor’s site, and move your
infrastructure out of your current site.

Resolution
• Identify the root cause of your outsourcing problems to make sure that switching providers isn’t just a temporary fix.
• Re-assess your outsourcing strategy to make sure that your outsourcing requirements and selected deployment model are
•
•
still suitable for your business.
Carefully make the financial and non-financial case for switching vendors and rehabilitating the relationship.
Implement good project management practices when implementing the move to minimize the risks involved and maintain
uptime of critical infrastructure.
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How to use this blueprint
Do-It-Yourself
Best-Practice
Toolkit
Do-It-Yourself Implementation
Use this Best-Practice Blueprint to
help you complete your project.
The slides in this Blueprint will walk
you step-by-step through every
phase of your project with
supporting tools and templates
ready for you to use. You can also
use this Best-Practice Blueprint to
facilitate your own project
accelerator workshop within your
organization using the workshop
slides and facilitation instructions
provided in the Appendix.
Free Guided
Implementation
We recommend that you
supplement the Best-Practice
Toolkit with a Guided
Implementation.
Guided Implementations are
included in most advisory
membership seats. Our expert
analysts will provide telephone
assistance to you and your team at
key project milestones to review
your materials, answer your
questions, and explain our
methodology.
Enroll in a GI for your project.
Leverage each of the tools in this
blueprint to complete the
optimization of this project.
Email
[email protected]
Or call 1-888-670-8889 and ask for the
GI Coordinator.
Onsite
Workshops
Info-Tech Research Group’s
expert analysts will come onsite to
help you work through our project
methodology in a 2-5 day project
accelerator workshop. We take
you through every phase of the
project and ensure that you have
a road map in place to complete
your project successfully. In some
cases, we can even complete the
project while we are onsite.
Book your workshop now!
Email
[email protected] to
get started.
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Diagnose the problem
Sections:
Section 1: Diagnose the problem
Section 2: Validate the outsourcing strategy
Section 3: Make the case and structure the
project
What’s in this Section:
• Identify the reasons for terminating your relationship
• Diagnose the problems underlying your
dissatisfaction with the current agreement
Section 4: Develop a plan to stay with the
provider
Section 5: Select a new provider
Section 6: Develop a plan and execute the
move
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Dissatisfaction with the current agreement and changed
circumstances are the two main triggers for leaving a vendor
Organizations can leave their vendor either by terminating their existing agreement
early or by not renewing their contract. Either way, there are generally two main
reasons outsourcing agreements end:
1. Dissatisfaction with the current agreement
• The vendor is not meeting expectations set out in the service level agreement (SLA).
• The service is too expensive in comparison to that offered by competitors.
• The costs are far exceeding expected costs and the financial case for the project has been destroyed.
2. Change in circumstances
The vendor has changed:
• The vendor no longer offers or provides the required
services.
• The vendor’s service levels have deteriorated due to
changes such as an acquisition.
Your organization has changed:
• The member’s new requirements have become
too expensive under the current contract.
• The member has new requirements that the
provider can’t meet.
• The member has developed significant internal
capabilities and can support infrastructure cheaper
in-house.
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1.1
Activity: Identify problems underlying the dissatisfaction
with your current agreement
Don’t confuse symptoms and problems. You risk experiencing recurring frustrations
by addressing the symptoms and ignoring the root problems.
Sticky Note Exercise
Recommended Participants
• Infrastructure Manager/VP
• IT Infrastructure Team
Steps
1. Hand out a pad of sticky notes and pens to each
participant.
2. Within five minutes, individually list why you’re
considering terminating the outsourcing agreement.
3. Post all the sticky notes on the board and discuss
whether each sticky represents a symptom or root
problem. Place symptom sticky notes on one side of the
board and root problem sticky notes on the other side.
4. Group common themes together and draw connections
between problems that may be triggering posted
symptoms.
5. For symptoms without root problems attached, discuss
what the underlying problem may be.
6. Record the root problems and symptoms under Project
Background in the Terminate the Outsourcing
Agreement Detailed Business Case.
Example:
Symptom:
Our managed
services
agreement is
too expensive
Symptom:
The vendor’s
communications
are always too
last minute for
us to react
We chose
the wrong
deployment
model
Poorly
scoped
requirements
We bought
solely
based on
vendor
brand
We never
reset our
contract, ad
hoc service
additions
Lack of
vendor
management
governance
Lack of
collaborative
vendor
relationship
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The vendor is not always the cause of dissatisfaction:
switching vendors will not magically fix your problems
Some common symptoms can be addressed by rehabilitating the situation without
leaving your vendor. Here are some examples:
Common Symptoms
The vendor can’t meet business
needs (e.g. not elastic enough to
meet rapid growth requirements)
The agreement is too expensive
The vendor is a poor
communicator and informs us of
disruptions last minute
The vendor is always trying to
nickel and dime us
Potential Root Problems
Rehabilitate
• Poorly scoped requirements
• Inappropriate deployment
model
• Certain components should
not have been outsourced
• Lack of vendor
management
• Non-collaborative approach
with the vendor
The vendor can’t meet the SLA
and the penalties aren’t doing
anything
SLA exceeds the vendor’s
capabilities
The contract is confusing
The contract is poorly
designed and uses “weasel
wording”
• Re-assess your outsourcing
strategy
• Develop vendor management
capabilities
• Develop a collaborative
relationship
• Re-negotiate your contract
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Case Study: Get beneath the real drivers of your expensive
service
Industry: Power/Utilities
Location: United Kingdom
Context and Problem
Solution
Insight
• The organization’s
infrastructure was
outsourced through a
customized managed
services agreement.
• The organization has grown over
the duration of the service, resulting
in changes in requirements for the
service.
• All the requirements were added ad
hoc after the contract was
established, so there wasn’t a
formal process to review the new
contract and keep the costs in
check.
• The organization
needed to know
whether it was paying
too much for its
services.
• Since the service was highly
customized, a direct price
comparison was not possible without
going to the market and working with
vendors to understand the
requirements.
• The organization went to the market
and opened up for vendor proposals,
prepared to either rehabilitate with
the existing vendor based on
competitor prices or switch vendors.
• Outsourcing agreements
can seem too expensive
for many reasons.
Understanding the
drivers for the expensive
agreement is important.
• Regularly review and re-evaluate the
contract with your vendor over time,
especially if your organization is
actively modifying its requirements.
• If you’re unsure about whether you’re
paying too much for a highly
customized service, go to the market
to understand competitor offers, but
be prepared to switch.
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GI 1 – Call 1: Diagnose the problem
Prior to the Guided
Implementation
•
Compile the symptoms of your
outsourcing problems
•
Brainstorm potential root causes of
your problems
During the Guided
Implementation
An Info-Tech Consulting Analyst
will discuss with you:
• An approach or process to help you
understand your underlying
problems
Value & Outcome
At the conclusion of the Guided
Implementation call, you will have:
• A process to help you understand
your underlying problems
Deliverable: Next steps to decide how
to overcome your outsourcing issues
Arrange a call now:
Email [email protected] or call 1-888-670-8889 and ask for the Guided Implementation Coordinator to
book a Guided Implementation in your organization.
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Validate the outsourcing strategy
Sections:
Section 1: Diagnose the problem
Section 2: Validate the outsourcing strategy
Section 3: Make the case and structure the
project
Section 4: Develop a plan to stay with the
provider
What’s in this Section:
• Re-assess outsourced infrastructure components
• Re-evaluate your short-term and long-term
requirements
• Validate your selected deployment model
Section 5: Select a new provider
Section 6: Develop a plan and execute the
move
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